| azcentral.com: Fifty-two percent of highly skilled workers say offshoring to low-cost countries has affected their pay, according to a survey by labor union WashTech. Along with that, 5 percent say they've lost their jobs to an overseas worker they trained. Because of unremitting cost cutting and offshoring, the industry as a whole has an increased pessimism about the future demand for workers in the U.S., says WashTech, which also found that almost half of the 369 IT workers it surveyed reported getting raises last year, while 37 percent said their pay was unchanged and 15 percent said they took a pay cut. With giants like Hewlett-Packard and IBM expected to increase offshoring, while cutting jobs at home, the U.S. tech industry will have to stay in a state of recovery — with no end in sight, just yet. | Sponsor: IT Manager Development Series | | Maximize Your IT Management Career
This collection of 10 PDF-format books is packed with real-world advice that will help you realize your full potential as an IT manager. And the bonus IT Manager Toolkit includes 80 Word and Excel tools you can use right away. > Click here to learn more. | Asia Times Online: While Indian players were included when Netherlands-based ABN Amro Bank inked its outsourcing deal, the majority of the windfall went to global giant IBM. The fact that Indian companies got the equivalent of breadcrumbs from this major outsourcing deal proves that Indian IT companies are still not competing at the highest level, according to this article. TCS and Infosys seem happy enough with their deals, which are each the largest single deal bagged by them individually. But while the India IT sector celebrates these multi-million dollar deals, the reality is that the lion's share of the deal went to a multinational. So the question remains: will India's outsourcing sector really be able to overcome increased competition from multinational IT companies like IBM? Business Standard: Several major Indian firms are attacking the technology consulting space, hoping for a larger piece of the $21 billion market. Tata Consultancy and Wipro both hope to have 10 percent of their revenues come from consulting in less than three years. Indian companies aren't casting wide nets for new customers for the consultancy trade; most of their consulting clients are companies with whom they already have an outsourcing relationship. One Indian company sees the entry into consulting as a business strategy that isn't focused on consultancy as an end result, but on the revenue that will come from the application work that consulting will bring. | | Special Offer: Free White Paper Understanding the Total Cost of Ownership of IP Telephony Solutions
In this study conducted by an independent research and consulting group, the often-hidden costs associated with IP telephony ownership are revealed. Discover this analysis methodology for determining TCO based on six cost categories. It's highly flexible and can be used to generate similar benchmarking for many different sizes and types of deployment comparisons. Check it out today! | | | | Wired: The latest in the Microsoft/Google lawsuit is former Microsoft executive Kai-Fu Lee's accusation that the software giant failed miserably in its plans to gain a business footing in China. Lee admitted to writing an e-mail to another Microsoft exec in which he admitted his disappointment in Microsoft's incompetence in China. Lee also alluded to the Chinese government being less than impressed with Microsoft's internal politics. In his testimony, Lee also complained that Microsoft had more than 20 business groups operating virtually autonomously in China, with little cohesion. Lee mentioned a failure on Microsoft's part to live up to CEO Steve Ballmer's 2002 commitment to outsource $100 million in work to China. After being yelled at by Bill Gates himself, Lee left the software giant and defected to rival Google. Microsoft, obviously, is defending itself and its outsourcing practices, with Ballmer saying that, through trial and error, Microsoft had developed what he called a "secret sauce" for successful operations in China.
InformationWeek: A service-oriented architecture can create quite the conundrum when loosely coupled business processes are transformed into discrete interfaces that can be easily plugged and unplugged as business conditions require, with the outsourcing of those business processes to third-party providers. The advantage is the disadvantage. You can break business processes down to their most granular, logical elements; focus your development efforts on where you can provide the most differentiation; and let someone else handle the overflow or the low-profit transactions. But you open yourself up to a management challenge the likes of which you've never seen. This isn't just a problem for systems management; it is also a problem for business-process management, relationship management and source-code control. This article examines exactly what is at stake when companies hand off components of service-oriented architectures to third-party providers. Hindu Business Line India: Because of the increasing complexity of applications and the reduced tolerance for defects, the independent software market is growing. While it's certainly not a boom, it is a trend that is fast becoming the norm, according to this article. The reduced cycle time and higher productivity and quality at a lower cost that is offered by many Indian outsourcing companies are making India a region to watch as the software testing market grows. According to experts, companies that test their software can expect to reduce software failures to about 20 percent. India has close to 10 independent software testing firms, and all the leading players have set up special testing business units as well. | IT Marketplace | | | | | Tell the IT Business Edge audience of technology decision makers about your product, service, event, or job. Click here to list it in the IT Marketplace! | | 3 QUESTIONS:
Sharing Best Retention Practices Curbs High Attrition Rates in India
With Joyce Gioia, president of The Herman Group, a firm of strategic business futurists concentrating on workforce and workplace issues. Question: How much of a problem is the attrition rate in India in the IT outsourcing sector? How does it compare to attrition rates in the U.S. and the UK?
Gioia: The attrition rate in India is a huge problem for U.S. companies outsourcing to India because it adds still another layer of challenges to dealing with an offshore contingent of workers. It means a lack of continuity in service and, perhaps, a constant retraining of new recruits on the company culture, proprietary software and establishing new relationships from scratch.
The law of supply and demand is alive and well in the world. In India, the rapid expansion of new businesses to meet worldwide needs has created thousands of new jobs. With more choices, job-hopping is becoming as prevalent there as it was in the U.S. in the late '90s. Regarding the comparison of attrition rates, the U.S. has been in a relatively slower mode, thus the rates of attrition in the U.S. have been relatively lower. This is also the case for England, though neighboring Ireland has experienced an almost non-stop six-year boom. Question: How much does the high attrition rate add to the costs of sending IT work to India?
Gioia: The answer to this question is: "It depends." It depends on the replacements they are able to hire, their learning curves and the complexity of the project. Some of the non-monetary costs are time to establish new relationships; ramp-up time for the new recruits; stress on supervisors and project managers, as well as coworkers; delays in work completion (missed deadlines); and significantly decreased customer service — both internal and external. Question: What can companies do to help encourage better retention at their partners' offshore locations?
Gioia: U.S. companies can help their offshore vendors hold onto their people by introducing them to some of the strategies and tactics that have worked for U.S. companies. However, it must be understood that the cultures are different and may require different strategies and tactics to reduce attrition.
Companies can encourage these partners to be more employee-centered, to look for ways to "bond" employees to their companies. For example, companies could talk to their partners about their onboarding process and confirm that their orientation is strong. They could help them find non-monetary ways to connect with their employees, such as celebrating birthdays and anniversaries of employment, making work fun, looking for ways to encourage team spirit. They could suggest that their partners avoid "mercenary Darwinism," offering money as an incentive to sign on. This perpetuates employees looking for another sign-on bonus when the contract period is up. | | Also from IT Business Edge: Voice & Data Convergence Voice & Data Convergence examines the strategic and tactical implications of emerging IP telephony technologies, from VoIP services to advanced CRM systems to security considerations. Find out what every IT decision maker should know. Click here to sign up! | By the Numbers
$200 million Size of the software testing business in India in 2003-2004, according to the META Group. The market could increase to $700 million to $1 billion by 2007. $7.3 billion Amount of ITeS-BPO business expected in India during the current financial year, 41 percent higher than last year, according to Nasscom projections. $120 million Amount that Indian technology companies earned from consulting in 2004. This fraction of the $17 billion raked in from IT exports showcases the ample room for growth in India's consultancy market. Breaking Headlines
Macworld UK: Greenpeace activists dumped over 1,100 pounds of used PCs outside the Bangalore headquarters of outsourcing giant Wipro in an effort to try to get Wipro to stop using hazardous chemicals in the manufacture of its products and to take back end-of-life products from its customers. Greenpeace is hoping that by targeting such an "iconic" outsourcing company in India, Wipro will adopt more environmentally friendly practices and start a trend that will trickle down throughout the industry in India. Wipro responded by saying that it is reviewing its policies. According to Greenpeace, India has become a dumping ground for both its own electronic waste and waste shipped there by other countries. Hindustan Times: According to a new Nasscom study, the Indian information technology enabled service (ITeS) and business process outsourcing (BPO) industries will employ nearly 470,000 people in India by the end of the 2005-06 financial year, in comparison to 348,000 people employed in those industries in 2004-05. Nasscom believes that India's high PQRS (productivity, quality, rate and scalability) factor is driving this increase. The study noted that 20 top players control 49 percent of the ITeS and BPO market in India. The Register: Thanks in part to the threat of offshoring, the British Computing Society is celebrating a 20 percent surge in membership, bringing its numbers up to 50,000. According to one BCS exec, IT pros in the UK are struggling to find ways to compete against the threat of offshoring, so they are working to attain new IT skills to remain employed. The IT skills that are in most demand are systems design and implementation, software testing, security and IT service management. Emerging Trends
Silicon Republic: Ireland's rising labor and material costs could have a large, negative effect on the growth of IT outsourcing companies in Ireland, according to market intelligence firm iReach. To combat this potential downswing, iReach believes IT outsourcing companies should leverage advantages such as Ireland's attractive tax incentives, educated workforce and improving ICT infrastructure that will make it a viable location for high-value business services. By moving to higher-value outsourcing activities, Irish IT companies can earn more than from pure infrastructure outsourcing, while providing added value to their clients. Line56.com: Being at the top of the IT outsourcing world has its disadvantages; for India that success is coming in the form of higher wages cutting into the cost-effective value of outsourcing there. AMR Research found that IT salaries in India went up by 15 percent in 2004, and recent college graduates reaped 20 percent pay increases. In order to save money despite the wage raises, one expert recommends that U.S. companies send more work to India to increase the total amount of savings, negotiate longer-term contracts and skew offshore investment in favor of tools over labor. India Daily: TPI has released a new study on outsourcing that traces the five stages in the "maturity curve" of global service delivery, finding that most Indian BPOs are in the second or third phases — still a long way from reaching the pinnacle. In a nutshell, TPI's findings suggest that there is an absence of a truly global Indian firm, below-expectation productivity exists among the Indian players, and there is a rapid rise of rival destinations fighting India for peak levels of maturity in this industry. IT Business Edge: Outsourcing for Strategic Advantage
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Amy Jackson Sellers is a freelance editor based in New York. She previously worked as the managing editor for Louisville Magazine and as an editor for TechRepublic, a Web site for IT professionals. You can e-mail her at
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